Half-yearly Report
11 October 2007
MERRILL LYNCH BRITISH SMALLER COMPANIES TRUST plc
Half yearly financial announcement of results in respect of the six months
ended 31 August 2007
Performance to 31 August 6 months 1 year 3 years 5 years
2007
Net asset value per share +1.4% +28.2% +113.4% +162.3%
Ordinary share price -2.6% +26.2% +117.9% +174.2%
FTSE SmallCap Index (ex -5.5% +9.8% +48.9% +80.4%
IC's)
Hoare Govett Smaller
Companies plus AIM (ex ICs)
Index -1.1% +14.5% +64.6% +116.4%
Sources: BlackRock, Datastream.
- The Company's net asset value per share increased by 1.4% compared with a
fall in the benchmark, the FTSE SmallCap Index excluding investment
companies, of -5.5%.
- Earnings per share amounted to 4.10p for the period (2006: 3.05p).
- The Directors have declared an interim dividend of 1.89p per share, a 3.3%
increase on the 1.83p interim dividend paid last year, payable on 5
November 2007 to shareholders on the Company's register on 19 October 2007.
- With effect from 1 September 2007 the benchmark was changed to the Hoare
Govett Smaller Companies plus AIM (excluding Investment Companies) Index
which fell by -1.1% during the six month period.
For further information please contact:
Jonathan Ruck Keene, Managing Director Investment
Trusts - 020 7743 2178
Mike Prentis, Fund Manager - 020 7743 2312
Nigel Webb, Director Media & Communications - 020 7743 5938
BlackRock Investment Management (UK) Limited
Or
William Clutterbuck
The Maitland Consultancy - 020 7379 5151
Chairman's Statement
In the first six months of the Company's year, equity market strength succumbed to
global concerns about the crisis in the US sub-prime mortgage market and the spread of
fear and uncertainty into adjacent credit markets, culminating in a number of fierce
corrections since mid July.
Despite this, for the half year ended 31 August 2007, the Company's net asset value
("NAV") increased by 1.4 % to 460.28p. By comparison, the Company's benchmark index for
this period, the FTSE SmallCap Index excluding Investment Companies, closed down 5.5%
and the Hoare Govett Smaller Companies plus AIM (excluding Investment Companies) Index
fell by 1.1%. The smaller companies sector has not been in favour during the period and
the Company's share price declined by 2.6% (reflecting a widening of discounts across the
sector in general).
Revenue return and dividends
Revenue return per share for the period reflected strong dividend growth from our
portfolio companies, amounting to 4.10p compared with 3.05p for the interim stage in
the previous year.
As a result of this, the Board is pleased to declare an interim dividend of 1.89p per
share representing an increase of 3.3% on 2006. This dividend is payable on 5 November
2007 to shareholders on the Company's register on 19 October 2007.
Outlook
Financial markets remain highly volatile in the wake of the "credit crunch" sparked off
by anxiety over US sub-prime mortgage linked securities. With the possible exception of
the US, the global economy appears reasonably robust. In the UK, interest rates may have
reached a cyclical high, and in the US they have recently been cut to maintain economic
activity. A backdrop of peaking interest rates combined with satisfactory UK and strong
Far Eastern growth should favour the trading prospects of many of our holdings.
Since 1 September the FTSE 100 Index has regained most of the lost ground but this major
recovery has yet to spread to the smaller companies sector. However, as confidence
rebuilds, we believe the Company remains well placed to grow its net asset value per
share over the medium term, although this growth is unlikely to be smooth or
predictable.
Richard Brewster
10 October 2007
Interim Management Report and Responsibility Statement
The performance of the Company in the period and the outlook for the future are
discussed in the Chairman's Statement and Investment Manager's Report. Other material
events and transactions in the period are set out below.
Gearing
The Company maintained net borrowing in the range of £18.7 million to £24.9 million
(8.4% to 10.4% of shareholders' funds). Net borrowing at 31 August 2007 stood at £22.7
million. Gearing levels are reviewed regularly by the Board with the Investment Manager
and gearing currently stands at 8.9%.
Discount and share buy backs
During the period the Company's shares traded at an average discount to NAV of 14.0% and
at the period end stood at 15.2%, based on the capital only NAV with debt at fair value.
The Company bought back 518,815 ordinary shares in the period, representing 1.0% of the
share capital in issue at the start of the period, all of which were placed in treasury.
These were bought in at a discount of 14.9% for a total consideration of £2,128,000.
Benchmark
At an Extraordinary General Meeting held on 31 August 2007, shareholders voted in favour
of changing the Company's benchmark index from the FTSE SmallCap Index excluding
Investment Companies to the Hoare Govett Smaller Companies plus AIM (excluding
Investment Companies) Index. The change was effective from 1 September 2007. This will
not affect the Company's investment policy which remains unchanged.
The Investment Management Agreement has also been amended to reflect the new benchmark
by reference to which any performance fee may become payable.
Company name
Following the merger of Merrill Lynch Investment Managers with BlackRock in September
2006, BlackRock became the master brand for the merged business. Accordingly, a full
product rebrand is underway at BlackRock and the Board now expects to put forward
proposals regarding the Company's name in the Spring of 2008.
Registrar
At the end of September the Company's share registration services were transferred to
Computershare Investor Services PLC. Details of the new Registrar are given in the
"Directors, Investment Manager and Administration" section at the end of this half
yearly financial report, together with a dedicated telephone helpline.
Board changes
As mentioned in the most recent Annual Report, Robert Ffoulkes-Jones retired as a
Director following the Annual General Meeting in June. The Board is in the process of
filling the vacancy and expects to make an announcement in the near future.
VAT
The Board has welcomed the European Court of Justice's ruling in the JP Morgan
Claverhouse case which endorses the AIC claim that investment trusts are entitled to a
VAT exemption on their management fees. However, whilst this should be beneficial for
the Company, HM Revenue & Customs has yet to comment on the judgement and the case has
yet to be decided at the UK VAT tribunal, to which it has been referred.
Related party transactions
The Manager is regarded as a related party and details of the management and performance
fees payable are set out in Note 4. As a result of the strong performance over the last
two years, a performance fee of £601,000 has been accrued in the period.
Risks and uncertainties
The principal risks faced by the Company are as follows:
- Market risk: The Company's investment activities expose it to a variety of
financial risks that include market price risk, interest rate risk and liquidity
risk. The Board regularly reviews and agrees policies for managing these risks in
response to market developments.
- Performance risk: An inappropriate investment strategy may lead to
underperformance relative to the benchmark. The Board monitors and maintains
an adequate spread of investments in order to minimise the risks associated
with factors specific to particular sectors and based on the diversification
requirements inherent in the Company's investment policy.
- Discount volatility: The Company's share price can trade at a discount to its
underlying net asset value. The Board operates a share buy back programme
which is reviewed regularly.
- Regulatory risk: The Company operates as an investment trust in accordance
with section 842 of the Income and Corporation Taxes Act 1988. The Investment
Manager monitors investment movements, the level and type of forecast income
and expenditure and the amount of any proposed dividends to ensure that the
provisions of section 842 are not breached.
- Operational risk: As the Company has no employees it relies upon the services
provided by third parties and is dependent on the control systems of the
Investment Manager and the Company's other service providers. The security,
for example, of the Company's assets, dealing procedures, accounting records
and maintenance of regulatory and legal requirements, depend on the effective
operation of these systems which are regularly tested and monitored. An
internal control report, which includes an assessment of risks, together with
procedures to mitigate such risks, is reviewed by the Audit Committee. The
custodian and Investment Manager also produce annual FRAG 21 reports which are
reviewed by their respective auditors and give assurance regarding the effective
operation of controls.
Responsibility statement
The Directors are responsible for preparing the half yearly financial report, in
accordance with applicable laws and regulations. The Directors confirm to the best of
their knowledge that:
- the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with applicable UK Accounting
Standards and the Accounting Standards Board's Statement `Half Yearly
Financial Reports'; and
- the interim management report includes a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The half yearly financial report was approved by the Board on 10 October 2007 and the
above responsibility statement was signed on its behalf by the Chairman.
Richard Brewster
By order of the Board
10 October 2007
Investment Manager's Report
Overall performance
The Company's NAV per share increased by 1.4% to 460.28p during the period, having been
up by almost 10% in mid July. However markets reacted negatively to worries about
sub-prime lending, mainly in the US, and this had a knock on impact on UK smallcaps. Our
benchmark during the period, the FTSE SmallCap Index excluding Investment Companies,
fell by 5.5%.
Portfolio performance
Relative outperformance has once again been driven mainly by good stockpicking, although
most of our preferred themes have also performed well. The stocks which contributed most
during the period were London Capital, Rathbone Brothers, Oilexco, Consolidated
Minerals, Keller and Babcock International.
London Capital provides spread betting products on the financial markets to retail clients
and on-line foreign exchange trading services to institutional clients. Its half yearly
results showed earnings up 129% and subsequent trading is likely to have been sound given
the volatility in financial markets, conditions which suit them. The shares appreciated
76% during the period. Rathbones is showing good organic growth in funds under management
which led to strong earnings growth at the interim stage and a confident outlook. Oilexco
continued its successful run of finding oil in the North Sea with a discovery on the
Huntingdon prospect; oil production from the Brenda field has now started which should
generate very material cashflows. Consolidated Minerals, a producer of manganese, nickel
and chromite has seen a sharp pick up in the manganese price which, if sustained, will
materially affect profits; at the same time it has received bids from three suitors
which have driven up the share price. Keller again produced strong earnings growth as it
benefits from high levels of large, complex construction projects around the world where
its ground engineering techniques are in demand. Keller also announced that its full
year results will significantly exceed last year's very strong results, which led to
further earnings upgrades. Babcock announced very solid results with underlying earnings
up 36%, a confident outlook and the purchase of Devonport, which has unique capabilities
to support nuclear submarines and surface vessels for the Royal Navy.
The Company's worst performing holding was Civica, a provider of software to the public
sector. It has traded in line with market expectations, but a private equity bid fell
through and this was not well received by the market. We believe the shares, which
currently trade on only 10 times this year's earnings, offer good value. Looking at
sectors and themes, the only disappointment was the overweight position in real estate,
which cost 1.2% in relative performance. Real estate stocks have been hit by an
expectation that yield compression is at an end and we have reduced our exposure to
the sector.
Activity
We continue to search for interesting new holdings; usually 0.5% of total assets are
invested in each. New holdings included market purchases of Axon, Euromoney, Jarvis and
EAG Group, an Initial Public Offering ("IPO"). All of these companies are profitable,
well managed businesses. Axon is now the largest consultancy in the world that focuses
exclusively on the implementation of SAP software and continues to grow earnings
rapidly. Euromoney is an international publishing, events and electronic information
group focused on the finance, law, energy and transport sectors; it recently acquired
Metal Bulletin, a former portfolio holding. It has very strong market positions, and is
well placed to continue to grow. Jarvis, shares in which were brought after a company
visit, is now more focused on plant hire for the rail sector and track renewal. The team
which has implemented the turnaround over the last two years is impressive, and they are
confident about short and medium term activity levels and prospects. EAG provides
testing services helping customers speed up their own research and development
activities.
We disposed of a number of holdings as we became more cautious about their prospects.
These included Carter & Carter, which was sold before two profit warnings, Imperial
Energy, Nestor Healthcare, Hansard Global, Songbird Estates and Melrose Resources.
Holdings in Spice, Headlam, Gyrus and Caretech were sold on valuation grounds and
Universal Salvage was taken over.
Investment strategy and portfolio positioning
Our investment strategy remains unchanged. We remain focused on good quality growth
companies which are trading well and are sensibly valued. During recent market
weakness we have added to many of these core holdings.
The portfolio positioning, and the themes running through it, have not changed much in
recent months. For instance, we still like companies exposed to the strong economic
growth which continues to be experienced in China and other Far Eastern countries,
companies which benefit from high levels of commercial construction activity in the UK
and elsewhere, and companies which help to manage and maintain the UK's infrastructure
of roads, hospitals and other such assets. We remain cautious of the UK's general retail
sector; it looks as though recent increases in interest rates may be having an impact on
retail spending. We do not hold companies in the food producers sector as we believe
these have no sustainable pricing power, neither do we hold biotechnology stocks, which
generally have negligible revenues, are unprofitable and require too great a leap of
faith. We are very conscious of the US dollar exposure of companies since this has been
a major headwind for many companies selling into the US; generally we need to see strong
organic US sales volume growth, more than making up for the weakness of the US dollar,
not to sell or reduce a holding.
Outlook
We are taking a reasonably positive view on global GDP growth, note that US interests
rates have already been cut, and believe that UK interest rates are close to peaking.
This should be favourable for equities in due course. The portfolio provides exposure to
strong trends and we remain confident that many of the Company's holdings will continue
to experience attractive earnings growth. Valuations are reasonable, and so we expect
good earnings growth to lead to further increases in the share prices of our holdings.
Mike Prentis
BlackRock Investment Management (UK) Limited
Twenty Largest Holdings (in alphabetical order)
31 August 2007
Company Business activity
Aveva Group Development and marketing of engineering computer software
Brewin Dolphin Holdings Fund management and stockbroking
BSS Group Distribution of heating, plumbing, process control and pipeline
equipment
Chaucer Holdings Provision of insurance services
Dechra Pharmaceuticals Development, manufacture and supply of veterinary products
Domino Printing Manufacture of inkjet and laser commercial printers
Fidessa Group Supply of trading systems and market data to financial markets
Gooch & Housego Design and manufacture of acousto-optic devices
Hill & Smith Holdings Manufacture and hire of steel road barriers and related products and
services
ITE Group Organisation of exhibitions in emerging markets
Keller Group Specialist ground engineering
Kier Group House building, construction and project management
Mouchel Parkman Provision of road, rail and other infrastructure services
MTL Instruments Group Manufacture of electronic safety equipment
Rathbone Brothers Private client fund management
Speedy Hire Hire of tools and other products
Spirax-Sarco Engineering Design and manufacture of steam management systems
Synergy Healthcare Provision of medical and health related support services
Victrex Manufacture and supply of PEEK thermoplastic products
WSP Group Engineering design, planning and project management consultancy
INCOME STATEMENT
for the six months ended 31 August 2007
Revenue Return £'000 Capital Return £'000 Total Return £'000
Six months Six months Year Six months Six months Year Six months Six months Year
ended ended ended ended ended ended ended ended ended
31.08.07 31.08.06 28.02.07 31.08.07 31.08.06 28.02.07 31.08.07 31.08.06 28.02.07
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Gains on
investments held
at fair value
through profit
or loss - - - 4,332 1,582 48,182 4,332 1,582 48,182
Income from
investments held
at fair value
through profit
or loss (note 3) 2,579 1,991 3,729 - - - 2,579 1,991 3,729
Other income
(note 3) 4 77 90 - - - 4 77 90
Investment
management fees
(note 4) (192) (156) (336) (1,284) (710) (1,649) (1,476) (866) (1,985)
Operating
expenses (129) (166) (299) - - - (129) (166) (299)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net return
before finance
costs and
taxation 2,262 1,746 3,184 3,048 872 46,533 5,310 2,618 49,717
-------- -------- -------- -------- -------- -------- -------- -------- --------
Finance costs (216) (199) (360) (637) (390) (874) (853) (589) (1,234)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Return on
ordinary
activities
before taxation 2,046 1,547 2,824 2,411 482 45,659 4,457 2,029 48,483
Taxation on
ordinary
activities (2) (7) - - - - (2) (7) -
-------- -------- -------- -------- -------- -------- -------- -------- --------
Return on
ordinary
activities after
taxation 2,044 1,540 2,824 2,411 482 45,659 4,455 2,022 48,483
-------- -------- -------- -------- -------- -------- -------- -------- --------
Return per
ordinary share
(note 5) 4.10p 3.05p 5.61p 4.84p 0.95p 90.65p 8.94p 4.00p 96.26p
===== ===== ===== ===== ===== ===== ===== ===== =====
The total column of this statement represents the income statement of the Company. The supplementary revenue and capital
return columns are both prepared under guidance published by the Association of Investment Companies. The Company has no
recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in
Shareholders' Funds. All items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the period.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the six months ended 31 August 2007
Share Capital Capital Capital
Share premium redemption reserve - reserve - Revenue
capital account reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months ended 31 August
2007 (unaudited)
At 28 February 2007 12,498 38,952 1,982 93,551 75,237 4,640 226,860
Return for the period - - - 14,676 (12,265) 2,044 4,455
Shares purchased and held in treasury - - - (2,128) - - (2,128)
Dividends paid (see (a) below) - - - - - (1,465) (1,465)
--------- --------- -------- -------- ---------- -------- ----------
At 31 August 2007 12,498 38,952 1,982 106,099 62,972 5,219 227,722
--------- --------- -------- -------- ---------- -------- ----------
For the six months ended 31 August
2006 (unaudited)
At 28 February 2006 12,641 38,952 1,839 70,016 55,001 4,172 182,621
Return for the period - - - 15,181 (14,699) 1,540 2,022
Dividends paid (see (b) below) - - - - - (1,431) (1,431)
--------- --------- -------- -------- ---------- -------- ----------
At 31 August 2006 12,641 38,952 1,839 85,197 40,302 4,281 183,212
--------- --------- -------- -------- ---------- -------- ----------
For the year ended 28 February 2007
(audited)
At 28 February 2006 12,641 38,952 1,839 70,016 55,001 4,172 182,621
Return for the year - - - 25,423 20,236 2,824 48,483
Shares purchased and cancelled (143) - 143 (1,888) - - (1,888)
Dividends paid (see (c) below) - - - - - (2,356) (2,356)
--------- --------- -------- -------- ---------- -------- ----------
At 28 February 2007 12,498 38,952 1,982 93,551 75,237 4,640 226,860
--------- --------- -------- -------- ---------- -------- ----------
(a) Final dividend of 2.93p per share for the year ended 28 February 2007, declared on 24 April 2007
and paid on 15 June 2007.
(b) Final dividend of 2.83p per share for the year ended 28 February 2006, declared on 28 April 2006
and paid on 13 June 2006.
(c) Final dividend of 2.83p per share for the year ended 28 February 2006, declared on 28 April 2006
and paid on 13 June 2006 and the interim dividend of 1.83p per share for the six months ended 31 August 2006,
declared on 9 October 2006 and paid on 6 November 2006.
BALANCE SHEET
as at 31 August 2007
31 August 31 August 28 February
2007 2006 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value through profit
or loss 251,641 195,468 249,835
Current assets
Debtors 1,548 879 1,567
Cash 14 5,822 -
---------- ---------- ----------
1,562 6,701 1,567
Creditors - amounts falling due within one
year (10,698) (4,189) (9,766)
---------- ---------- ----------
Net current (liabilities)/assets (9,136) 2,512 (8,199)
---------- ---------- ----------
Total assets less current liabilities 242,505 197,980 241,636
Creditors - amounts falling due after more
than one year (14,783) (14,768) (14,776)
---------- ---------- ----------
Net assets 227,722 183,212 226,860
====== ====== ======
Capital and reserves
Share capital 12,498 12,641 12,498
Share premium account 38,952 38,952 38,952
Capital redemption reserve 1,982 1,839 1,982
Capital reserve - realised 106,099 85,197 93,551
Capital reserve - unrealised 62,972 40,302 75,237
Revenue reserve 5,219 4,281 4,640
---------- ---------- ----------
Total equity shareholders' funds 227,722 183,212 226,860
====== ====== ======
Net asset value per ordinary share (note 5) 460.28p 362.34p 453.78p
====== ====== ======
CASH FLOW STATEMENT
for the six months ended 31 August 2007
Six months Six months
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash inflow from operating activities 1,174 1,152 1,523
Servicing of finance (799) (582) (1,219)
Capital expenditure and financial investment
Purchases of investments (69,415) (49,399) (136,841)
Proceeds from the sale of investments 72,139 53,917 131,186
---------- ---------- -----------
Net cash inflow/(outflow) from capital
expenditure and financial investment 2,724 4,518 (5,655)
---------- ---------- -----------
Equity dividends paid (1,465) (1,431) (2,356)
---------- ---------- -----------
Net cash inflow/(outflow) before financing 1,634 3,657 (7,707)
---------- ---------- -----------
Financing
Purchase of ordinary shares (2,128) - (1,888)
---------- ---------- -----------
Net cash outflow from financing (2,128) - (1,888)
---------- ---------- -----------
(Decrease)/increase in cash in the period
(note 6) (494) 3,657 (9,595)
===== ===== ======
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW FROM
OPERATING ACTIVITIES
Six months Six months
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net return before finance costs and taxation 2,262 1,746 3,184
Investment management and performance fee
capitalised (1,284) (710) (1,649)
Decrease/(increase) in accrued income 121 (155) (147)
Decrease/(increase) in debtors 15 5 (8)
Increase in creditors 62 273 143
Overseas withholding tax suffered (2) (7) -
---------- ---------- -----------
Net cash inflow from operating activities 1,174 1,152 1,523
---------- ---------- -----------
Notes
1. Principal activity
The Company conducts its business so as to qualify as an investment trust
company within the meaning of section 842 of the Income and Corporation Taxes
Act 1988.
2. Basis of preparation
The accounts have been prepared under the historical cost convention, modified
to include revaluation of investments and in accordance with Applicable
Accounting Standards, pronouncement on interim reporting issued by the
Accounting Standards Board and with the Statement of Recommended Practice
"Financial Statements of Investment Trust Companies" ("SORP") revised December
2005.
The taxation charge has been calculated by applying an estimate of the annual
effective tax rate to any profit for the period.
All of the Company's operations are of a continuing nature.
Further details of the accounting policies used are set out in the Company's
financial statements at 28 February 2007.
3. Income
Six months Six months
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment income:
UK listed dividends 2,361 1,903 3,667
Bond interest 6 18 35
Overseas listed dividends 212 70 27
-------- ------- -------
2,579 1,991 3,729
-------- ------- -------
Other income:
Deposit interest 4 69 69
Underwriting commission - 8 21
-------- ------- -------
4 77 90
-------- ------- -------
Total 2,583 2,068 3,819
-------- ------- -------
4. Investment management fees
Six months ended Six months ended Year ended
31 August 2007 31 August 2006 28 February 2007
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment management
fees 163 492 655 133 396 529 286 859 1,145
Performance fees - 601 601 - 209 209 - 546 546
Irrecoverable VAT 29 191 220 23 105 128 50 244 294
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total 192 1,284 1,476 156 710 866 336 1,649 1,985
-------- -------- -------- -------- -------- -------- -------- -------- --------
The investment management fee is calculated based on 0.65% in respect of the
first £50 million of the Company's total assets less current liabilities,
reducing to 0.5% thereafter. A performance fee is payable at the rate of 10% of
the annualised excess performance in the two previous financial years, applied
to the average of the total assets less current liabilities of the Company. The
Investment Management Agreement has been amended with effect from 1 September
2007 to reflect the Company's new benchmark. The performance fee is payable
annually in April and is capped at 0.25% of the average of the total assets less
current liabilities.
Performance fees have been wholly allocated to capital reserve - realised as the
performance has been predominantly generated through capital returns from the
investment portfolio. A performance fee of £601,000 has been accrued for the six
month period to 31 August 2007 (six months ended 31 August 2006: £209,000 and
the year ended 28 February 2007: £546,000).
5. Net asset value and return per ordinary share
Revenue and capital returns per share are shown below and
have been calculated using the following:
Six months Six months
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
(unaudited) (unaudited) (audited)
Revenue return (£'000) 2,044 1,540 2,824
Capital return (£'000) 2,411 482 45,659
---------- ---------- ----------
Total return (£'000) 4,455 2,022 48,483
---------- ---------- ----------
Equity shareholders' funds
(£'000) 227,722 183,212 226,860
---------- ---------- ----------
The weighted average number
of ordinary shares in issue
on which the return per
ordinary share was
calculated, was: 49,849,721 50,563,523 50,365,660
The actual number of
ordinary shares in issue at
the end of each year, on
which the net asset value
per ordinary share was
calculated, was: 49,474,708 50,563,523 49,993,523
Revenue return per ordinary
share 4.10p 3.05p 5.61p
Capital return per ordinary
share 4.84p 0.95p 90.65p
---------- ---------- ----------
Total return per ordinary
share 8.94p 4.00p 96.26p
---------- ---------- ----------
Net asset value per
ordinary share (debt at
par value) 460.28p 362.34p 453.78p
---------- ---------- ----------
Net asset value per
ordinary share (debt at
fair value) 454.60p 355.32p 446.87p
---------- ---------- ----------
6. Movement in net debt
Six months Six months
ended ended Year ended
31 August 31 August 28 February
2007 2006 2007
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Reconciliation of net cash
flow to movement in net
debt
(Decrease)/increase in cash
in the period (494) 3,657 (9,595)
Foreign exchange movements 2 (1) (2)
Amortised debenture stock
issue expenses (7) (7) (15)
---------- ---------- ----------
Movement in net
(debt)/funds in the period (499) 3,649 (9,612)
Opening net debt (22,207) (12,595) (12,595)
---------- ---------- ----------
Closing net debt (22,706) (8,946) (22,207)
---------- ---------- ----------
7. Publication of non statutory accounts
The financial information contained in this half yearly
financial report does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The
financial information for the six months ended 31 August 2007
and 31 August 2006 has not been audited.
The information for the year ended 28 February 2007 has been
extracted from the latest published audited financial
statements which have been filed with the Registrar of
Companies. The report of the independent auditors on those
financial statements contained no qualification or statement
under section 237(2) or (3) of the Companies Act 1985.
A copy of the interim report will be available on the
BlackRock Investment Management (UK) Limited website at
www.blackrock.com/its.
11 October 2007
33 King William Street
London EC4R 9AS
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